The United Kingdom has received praise for shaking up its apprenticeship levy program to include all businesses, including hotels, with payrolls in excess of 3 million pounds sterling ($3.8 million) per annum.
Sources said the program’s benefits became clearer once it was realized that the levy is not an additional tax charged to individual businesses that qualify for the program. Instead, the levy moves funds that typically have already been budgeted for training to a different line item in businesses’ profit-and-loss accounts.
The levy is 0.5% of annual payroll across the entire company, parents and subsidiaries, which means qualifying businesses pay, at a minimum, £15,000 ($18,845). The U.K. government pays a £15,000 ($18,839) allowance that offsets the cost, meaning companies meeting only the minimal payroll qualification pay no levy. The government also will reimburse 90% of all additional program costs.
Levies are paid via the government’s PAYE (pay as you earn) tax system and reinvested into the payee’s accounts on a monthly basis to be used specifically for training.
Another change from draft legislation is companies now have 24 months to spend their pools of money, which gives them time to properly plan training suitable to individual needs.
The law went into effect on 6 April, with the first payments due from April payrolls.
Susan Bland, chief human resources officer at hotel management company Redefine|BDL Hotels, which has 49 U.K. properties, said she regards the scheme as beneficial to her company’s big picture.
“I think the focus has been very much on the levy, and initially one of our biggest concerns was how the scheme was going to be structured, whether we would hit the trigger and what part of the company would be responsible,” Bland said.
Aideen Whelehan, human resources manager at the Lancaster London, said she has sat on the apprenticeship program’s board of assessment for the past three years and is happy that the program is now live.
“The new scheme has demystified the old process, which turned a lot of employers off,” she said. “The new standards have been created by employers. Now it is a two-page document that allows employers to know what apprentices are doing and to go along on the journey with them.”
Whelehan said the previous apprenticeship regulation was “too confusing.”
“This now allows hotels to have control, and CEOs want the most from it, too,” she said. “They do not want to lose (the levy) as a tax.”
Naturally, for hotels, the cost of the program will fall on owners.
“That was a challenge. I wrote to all owners explaining the scheme, as they were connected parts of the overall business,” Bland said. She added that some of the owners she reached out to have payrolls that fall below the program’s threshold, but they would still receive pools of training money.
“This enables us to have consistency across the portfolio,” she said.
Budding Benefits
Bland said the changes to the apprenticeship program open up exciting training possibilities.
“We looked at what apprenticeship schemes we wanted to concentrate on, which would support the learning and development approach we had. But levy aside, this would have been the training we would have wanted to focus on anyway, as they would train the apprentices that we know would help (Redefine|BDL),” Bland said, adding the company currently has 18 apprentices and plans to add 50 by the end of 2018.
Robert Nadler, CEO of Nadler Hotels, which has four assets that are all in the U.K., said his company depends on apprentices even though Nadler Hotels is below the program’s salary threshold.
“This is money you ought to be spending anyway,” he said. “The courses are what you need in any event, just the difference might be now we have to have accredited courses, rather than the ones we would have used, a different trainer who might or might not be better. Apprenticeships are a fundamental part of our business.”
Sally Beck, GM of the Lancaster London and a member of the British Hospitality Association’s London Committee, said she and the BHA were pleased the “government has listened to small businesses and reduced the cash expectation to 10% for employers with more than 50 employees and zero for micro-businesses. Apprentices can now be deemed a real solution to recruitment strategies for these businesses, which can only benefit the sector in the long term.”
While the apprenticeship program is largely the same, different rules apply to each of the four countries that make up the U.K., sources said.
Rethinking Education
At the heart of the program might be a radical rethinking of education and employment in the U.K., sources said.
“The shake-up is very positive,” Bland said. “Standards are concise, straightforward, easy to understand, comprehensive, easy to train people against and easy to collate evidence against based on skills, knowledge and behavior. The minimum term of apprenticeships—12 months—also is excellent, as they are now more thorough, and at the end is an assessment that is quite rigorous.
“Previously, there was a qualification, but the (qualifier was) not work-ready. The new scheme will have a real impact on the industry.”
Nadler said he considers the scheme “frankly revolutionary,” and added it will bring more candidates with high-demand, real-life skills into the workforce. He also said apprenticeship will improve the work ethic of the U.K.’s younger generation.
“Apprenticeships have people earning their own money at a young age and instill discipline at an age when they are more impressionable,” he said. “There is a lot to be said for life skills. It provides tremendous self-respect and empowerment, especially in an industry where it is possible to work your way up the ladder. As an apprentice, everything you learn is relevant, and you use it immediately. There is much more incentive.”
But sources said the hotel industry needs to do more.
“This is a leap ahead, but we still need to demonstrate that there is a path up,” Nadler said.
Bland warned that businesses need to revise recruitment practices to attract a more diverse group of prospective apprentices, especially if post-Brexit the U.K. sees fewer European employees.
“The only counter comes back to the levy, not the scheme, as it can only be used to pay for development and thus might change employers’ approaches to recruitment,” she said. “Apprenticeship might be created, but not necessarily new jobs.”